Savings account is focused on individuals and puts a limit to the amount of money the depositor can withdraw from the same. Except specified institutions a saving account cannot be opened in the name of a government department. The procedure for opening a saving account is similar to the procedure followed for opening any other type of bank account. In times of calamities however RBI has permitted banks to allow an individual to open a saving account either against electricity bill or any other document of identity or through an introduction from another account holder. When it comes to depositing money in a saving account, a holder cannot deposit third party cheques into the saving account. There is no transaction tax to be paid in case of a saving account. Interest paid to saving account (3.5%) is calculated by taking into account the lowest balance on the 10th and end of the month. An additional 1% interest is payable to retired employees or spouse of a retired employee if the latter is deceased. The operation of saving account is stopped if the customer dies or becomes insane or insolvent. If the customer cannot be traced then the bank will place the balance in an unclaimed deposit account.

1. Saving Account
Introduction
Who can Open Account & Procedure for It
Operation
Cheque Book/ Passbook and Statements
Interest
Stopping Operation, Dormant A/c’s & Charges
Nomination
Deceased Depositor; Transfer
Closing of Account
Prohibitions & Exceptions
Other Organisations
Saving Account Retail Banking Chapter 05

2. Introduction
This chapter describes all features about saving account. The scope
of same can be summarized in following chart.
Saving Account
Definition Stopping Operations
Who can be Open & Procedure for it Dormant Accounts
It’s Operation Charges, Nomination
Cheque book, pass book/statement, Deceased Depositor
interest
Prohibitions Transfer/ Closing an Account
Other Organizations
Saving Account Retail Banking Chapter 05

3. Introduction
A saving account have been defined as, “a deposit account
which is subject to the restrictions as to the number of
withdrawals as also the amount of withdrawals permitted by the
bank during any specified period.
Saving account is meant to encourage savings and is
focused on individuals.
Saving Account Retail Banking Chapter 05

4. Who can Open Account & Procedure for It
An individual open saving accounts with conditions and
procedure.
Condition:
1.Balance not exceeding Rs.50,000/- of all accounts
2.Advances not exceeding Rs.1,00,000/-
3.It cant be opened in the name of Government department
except some specified institutions
Procedure:
1.Introduction from another account holder subject to full
KYC procedure
2.Photograph of the person and his address
3.Customer should be advices about keeping minimum balance
Saving Account Retail Banking Chapter 05

5. Who can Open Account & Procedure for It
Exceptions :In times of calamities RBI permitted to open A/c
with
1. Introduction from another account holder
2. Against electrical bill, document of identity
3. Introduction by two neighbors
Saving Account Retail Banking Chapter 05

6. Operation
The operation of saving account can be summarized as below:
1. Once account is opened customer can deposit/withdraw cash
2. RBI stated that no bank should refuse an acknowledgment
if the deposit is made at the counter.
3. Customer can deposit at ATM’s , but without
acknowledgment .
4. There is no restriction on depositing amount in saving
account.
5. The third party cheques may not be deposited in this.
6. The restriction on number of withdrawals on S.B. A/c.
The bank transaction tax is also not payable in case of savings
accounts.
Saving Account Retail Banking Chapter 05

7. Cheque Book/ Passbook and Statements
When a cheque book is exhausted, customer should fill a
cheque requisition slip in prescribed format and handover to the
bank. Generally, bank sends cheque book by courier. Banks either
gives customer a passbook or monthly statement. The R.B.I. has
stated that the entries in statements/pass books should not be
inscrutable and that brief, intelligible particulars must be entered.
Saving Account Retail Banking Chapter 05

8. Interest
Interest is paid on these accounts as they are intended to
encourage savings. The rate is 3.5% p.a. The interest is normally
paid at quarterly or longer rests. The calculation of interest is the
lowest balance in the saving account between the 10th and at the
end of the month. The same is credited only if it is one rupee or
more. An additional interest of 1% is also payable to retired
employee (but not resigned) and the spouse of a retired (deceased)
employee. If the amount of interest is above Rs.10,000/- tax must
be deducted at source. If depositor submit form 15G or 15H or a
certificate u/s 197(1) of Income Tax Act, 1961; then the tax need
not to be deducted. The Regional Rural Banks/ Local are banks
may allow additional interest ½ % p.a. on savings deposits.
Saving Account Retail Banking Chapter 05

9. Stopping Operation, Dormant A/c’s &
Charges
The operation of saving accounts will be stopped in
following cases:
1.On receipt of death of a customer
2.On receipt of notice of insanity of customer
3.On being advised that the customer is insolvent
If there is no customer initiated transaction in the account
for two years the account will be called as dormant account. Some
banks designate account is dormant if no transaction for six
months. These accounts are subject to greater check. The charges
for not maintaining minimum average quarterly balance are called
service charges. Customer must be advised of any change in the
charges.
Saving Account Retail Banking Chapter 05

10. Nomination
According to The Banking Laws (Amendment) Act, 1983
inserted section 45ZA to permit the facility of nomination.
Nomination in regard to joint account can be made by all the
depositor together and nominate a person to whom in the event of
death the amount in the joint account may be paid. The
nomination can be made in favour of individuals only and be
varied or cancelled at any time. On making payment to the
nominee the bank is fully discharged from its liability regarding
deposit.
Saving Account Retail Banking Chapter 05

11. Deceased Depositor; Transfer
When a depositor has utilised facility of nomination or
account is opened with survivor clause, payment of balance in the
account to nominee or survivor is valid if;
1.Bank has exercise due care in establishing identity of survivor
2.There is no court order restraining bank for payment etc.
Where deceased depositor has not made any nomination;
banks are expected to follow simple procedure for repayment to
legal heirs without inconveniencing them.
Saving Account Retail Banking Chapter 05

12. Deceased Depositor; Transfer
Banks are expected to settle claims and release the
payment within 15 days from receiving claim along with
documents such as proof of death of depositor, proof of
identification of nominee, PAN card etc.
Depositor of senior citizen savings schemes may transfer
the account from one deposit office to another on payment of a
transfer fee which is Rs.5 per lakh for first transfer and Rs.10 per
lakh for second transfer. The fee received is to be credited to
government.
Saving Account Retail Banking Chapter 05

13. Closing of Account
For closing of account all the account holders should give
their intent to close the account by submitting any unused cheques
to the bank. The bank may also request customer to close his
account if;
a.The customer is no longer a desirable person
b.The account has not been operated for a long time
If the customer can not be traced, the balance is placed in
an unclaimed deposit account.
Saving Account Retail Banking Chapter 05

14. Prohibitions & Exceptions
Following are some of the prohibitions:
1. No bank pay a rate of interest higher than stipulated by RBI from time
to time.
2. No bank should pay brokerage or gifts to agents/others for deposit placed
at the bank as well as using outsiders for collection of deposits.
3. The banks should not launch price/lottery or other schemes to attract
deposits.
However;
1. Commission may be paid to agents employed to collect door to door
deposits under a special scheme.
2. Incentives may be granted to staff members as approved by RBI
3. The gift may be given but the cost of such gifts should be up to Rs.250/-
Saving Account Retail Banking Chapter 05

15. Other Organisations
Following organisations can have saving account at bank:
1.Primary cooperative credit society financed by bank
2.Khadi & Village Industries Boards
3.Agricultural Produce Market Committees
4.Societies registered under the societies Registration Act, 1860
5.Companies governed by Companies Act, 1956 u/s 25 of the Act
provided they should not add the word “Limited” or the words
“Private Ltd.”
6.Self help groups engaged in promoting saving habits among
their member
7.Farmers clubs-Vikas Volunteer Vahini
Saving Account Retail Banking Chapter 05

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